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While the city sleeps investment companies see biggest gains of the year

9th September 2014 Print

With summer finally over and 8 months of performance behind us, how is the performance of the investment company sector shaping up so far? The Association of Investment Companies (AIC) has taken a look at performance over the year to date.

Summer in the City

So far this year, the average investment company sector is up 5%, with the majority of this growth coming between May and August. Indeed, anyone who ‘sold in May and went away’ would so far have lost out on 4% growth between 30 April and 31 August. The VCT sector performed even better, up 6% on average over the year to date, boosted in particular by the VCT Specialist (Environmental) sector (up 11%), and the VCT Generalist sector (up 8%).

Comeback kids

Many of the outperformers over the year to date are in a period of recovery after more challenging times, and this is particularly the case for Country Specialist: Asia Pacific and Global Emerging Markets sectors. The top performing investment company sector so far this year has been the Country Specialist: Asia Pacific sector, up 18% over the year to date (with 16% of this between May and August), staging something of a recovery after underperforming the wider investment company sector in 3 of the last 5 years. The Global Emerging Markets sector has also experienced something of a recovery, and is up 11% (again this strong performance came between May and August) after underperforming the wider investment company sector in 3 of the last 5 years. The last twelve months have also been better for this sector (see table on page 2).

In contrast, it has been a tougher time for Western focussed sectors after a strong period of performamce, with UK Smaller Companies, UK All Companies, European Smaller Companies and Japan having a more challenging year to date (see table).

Consistent good performers to date

The Global Smaller Companies sector is the second top performing sector over the year to date, up 16%, and this sector has outperformed the wider investment company sector in 3 of the last 4 years (5 year sector average data not available). In contrast to some of the other top performing sectors over the year to date, only 4% of this growth came between May and August. The third top performing sector over the year to date is the Sector Specialist: Biotechnology & Healthcare sector, up 14% (again, this good performance came between May and August). This continues a strong run of performance, with the sector having outperformed the wider investment company sector for each of the last 3 years.

Other good performers over the year to date, up 11% and thereby more than doubling the performance of the wider investment company sector, was the Asia Pacific Ex Japan sector (again, this strong performance was between May and August) and the Property Direct: Asia Pacific sector (with 6% of this growth between May and August). The Sector Specialist: Infrastructure (Renewable Energy) sector is up 10% over the year to date (with 6% growth between May and August) alongside the Sector Specialist: Infrastructure sector, up 10% (8% of this growth was between May and August).

Annabel Brodie-Smith, Communications Director, Association of Investment Companies (AIC) said: “Whilst St Ledger’s Day is still a few days away, it appears that while the City was sleeping over the quiet summer months, the stock market was disproving the ‘sell in May and go away adage’. On the whole, it has been a good summer for investment company performance.

“It is interesting to see that over the year to date, some of the Western focussed sectors have experienced a tougher time after a strong run of performance, whilst many Asian and Emerging Markets focussed sectors have seen their performance improving. In other words, there’s no telling where the stock market may take us. But whilst it’s early days, investors will nevertheless be pleased to see some of the Asian and Global Emerging Markets sectors staging a recovery, especially given more challenging times in recent years. The message, once again, is plain and simple: investors need to keep a diversified portfolio.”